Watch the On Demand Webinar here as Building Engines analyzes the findings of the inaugural State of Commercial Real Estate Operations 2017 research report.
Like all businesses, Commercial Real Estate is in a state of transformation, led by a digital and customer revolution. In dynamic times like these, best-in-class operations can provide a sustained and measurable advantage.
But which practices exemplify “best-in-class” operations at Commercial Real Estate (CRE) assets, and which are merely the cost of entry into this high-stakes marketplace? This is the question we set out to answer for commercial property owners and managers striving to compete—and win.
To get to the truth, we launched an industry-wide study across the US and Canada.
Over 900 CRE professionals participated, including:
– Commercial property owners and asset managers
– Property management executives
– Property managers and assistant property managers
– Building engineers
They told us comprehensive details regarding their operating practices, amenities, outlook, and certifications. This information represented over 500 management teams spanning multiple property types, including:
Trophy – The very top tier of buildings in major North American markets whose location and name recognition give them brand cachet
Class A – High-quality buildings that typically demand premium rental rates
Class B/C – Investment-quality assets competing below the top of the market
Medical Office Buildings (MOBs) – Serving physician practices, hospital departments, and other healthcare-related occupants; tend to be located on or near hospital campuses
Industrial – Primarily warehouse/distribution centers and research/development facilities
Retail – Serving retail tenants
Based on a measure of each property’s occupancy and rental rates, we were able to group properties into Leaders, Competitors, and Laggards, to distinguish what the high-performing firms do differently than their peers.
Here’s what we learned:
High-performing CRE teams are 1.6x more likely than their under-performing peers to track performance against lease service level agreements. This is the most consistently differentiating tenant service practice.
Tenant satisfaction is the top priority of CRE owners / asset managers and front-line operations staff. Property managers are especially attuned to satisfying tenants.
CRE Professional Outlook
Property staff at High Performing properties are more proactive, expect more change in their jobs, and have a less rigid prioritization of goals. They also have a more holistic view of their responsibilities than those at Laggard properties.
High Performers are 1.3x more likely to benchmark operating expenses to internal sources, and 1.7x more likely to benchmark to external sources.
Counterintuitively, High Performers do not staff more generously than Laggards within the same property type and class, indicating their competitive advantage is not due to a larger workforce.
High Performers are more likely to employ broadcast messaging systems, digital signs and screens, and traditional newsletters, using more channels to get information to tenants.
High Performers use technology to digitize content like equipment images and manuals more frequently than Laggards.
Amenities differentiate High Performers most clearly in the hyper-competitive Class A sector.
ENERGY STAR? certification is table stakes in 2017 at the top of the commercial office market. Over 70% of Trophy assets and 51% of Class A properties in this study are ENERGY STAR? certified.
…and much more.
Watch our free webinar, and learn which operational practices lead to competitive differentiation. Then, benchmark yourself against your peers in these 7 critical categories. See you there!
Understanding and emulating these practices can help every property drive more value from its operations in the quest to become measurably better.